Supreme Court Directs Re-evaluation of MBBS Fee Structure in Kerala Private Medical Colleges

Introduction

Date of the Judgment: 25 February 2021
Citation: (2021) INSC 79
Judges: L. Nageswara Rao, J. and S. Ravindra Bhat, J.

Can a regulatory committee arbitrarily fix fees for medical courses, or should it consider the proposals made by private colleges? The Supreme Court of India recently addressed this question in a case concerning the fee structure for MBBS courses in private self-financing medical colleges in Kerala. The core issue was whether the Admission and Fee Regulatory Committee (the Committee) had correctly exercised its powers in fixing the fees for the years 2017-18 and 2018-19. The Supreme Court directed the Committee to re-evaluate the fee structure, taking into account the factors outlined in the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 (the 2017 Act) and relevant Supreme Court precedents.

The bench comprised of Justice L. Nageswara Rao and Justice S. Ravindra Bhat. The judgment was authored by Justice L. Nageswara Rao.

Case Background

The dispute began after the enactment of the Kerala Professional Colleges or Institutions (Prohibition of Capitation Fee, Regulation of Admission, Fixation of Non-Exploitative Fee and Other Measures to Ensure Equity and Excellence in Professional Education) Act, 2006, which was later replaced by the 2017 Act. The 2017 Act established the Admission and Fee Regulatory Committee to regulate fees in private medical colleges. The Committee initially fixed a provisional fee of Rs. 5 Lakh for all medical colleges, which was challenged in the High Court of Kerala. The High Court ruled that provisional fee fixation was not permissible under the 2017 Act and directed the Committee to ensure that the fees proposed by the colleges were not exploitative.

Dissatisfied with the fees fixed by the Committee, the managements of private self-financing medical colleges approached the High Court again. The High Court held that the Committee had the power to ensure that the fee was reasonable and not excessive. The High Court set aside the order passed by the Committee due to lack of quorum and directed the Committee to pass fresh orders. The Committee reiterated the earlier fee structure, prompting further challenges. The High Court, in its order dated 14.01.2020, directed the managements to provide detailed financial information. The High Court then remanded the matter back to the Committee, directing a re-examination of the fee proposals.

Timeline:

Legal Framework

The core of the legal framework is the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017.

✓ Section 8 of the 2017 Act delineates the powers and functions of the Admission and Fee Regulatory Committee. Specifically, Section 8(1)(a) empowers the Committee to direct private medical institutions to furnish necessary information for determining the fee structure.

✓ Section 11 of the 2017 Act specifies the factors that the Committee must consider when determining the fee structure. These factors include the cost of land and building, infrastructure, equipment, salaries of staff, expenditure on administration and maintenance, and surplus for future development.

Arguments

Arguments by the State of Kerala:

• The State argued that the High Court had already upheld the fee fixation in its judgment dated 28.02.2019, and the matter was only remanded due to a lack of quorum.
• The State contended that the managements of private self-financing colleges had been given an opportunity to provide additional material, which they did not utilize.
• The State was aggrieved by the High Court’s direction restricting the Committee’s powers, stating that it was contrary to Section 11 of the 2017 Act.

Arguments by the Students:

• The students argued that the fee fixed by the Committee was appropriate and should not be interfered with.
• They contended that any revision of the fee would impose a financial burden on them and their families.
• The students emphasized that the fee charged by private self-financing colleges should be reasonable, relying on judgments of the Supreme Court.

Arguments by the Managements of Private Self-Financing Colleges:

• The managements asserted their right under Article 19(1)(g) of the Constitution of India to establish and administer institutions without undue interference.
• They argued that the Committee’s power was limited to scrutinizing the fee proposals made by them and that reasonable surplus was permitted under Section 11 of the 2017 Act.
• The managements contended that the High Court was correct in directing the consideration of audited accounts for fee fixation.
• They argued for a de novo consideration of the fee after the remand by the High Court on 28.02.2019 and complained about the inadequate hearing given to them by the Committee.
• They sought a fee structure at par with Deemed Universities and other states.

Submissions by Parties

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the High Court was correct in holding that the Committee should re-examine the matter of fee fixation de novo after the remand by the High Court on 28.02.2019.
2. Whether the High Court was correct in restricting the powers of the Committee in the matter of fee fixation.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• P.A. Inamdar & Ors. v. State of Maharashtra & Ors. [(2005) 6 SCC 537] – Supreme Court of India: This case was referred to for the principles governing the fixation of fees in private unaided professional institutions.
• T.M.A. Pai Foundation & Ors. v. State of Karnataka & Ors. [(2002) 8 SCC 481] – Supreme Court of India: This case was cited for the autonomy of private unaided institutions in fixing fees, subject to the prohibition of profiteering and capitation fees.
• Islamic Academy of Education v. State of Karnataka & Ors. [(2003) 6 SCC 697] – Supreme Court of India: This case was considered for the principles relating to the regulation of fees in private educational institutions.
• Modern Dental College & Research Centre & Ors. v. State of Madhya Pradesh & Ors. [(2016) 7 SCC 353] – Supreme Court of India: This case was referred to for the principles of fee fixation in private medical colleges.

Legal Provisions:

• Section 8 of the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017: This section outlines the powers and functions of the Admission and Fee Regulatory Committee.
• Section 8(1)(a) of the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017: This provision empowers the Committee to direct private medical institutions to furnish necessary information for determining the fee structure.
• Section 11 of the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017: This section specifies the factors that the Committee must consider when determining the fee structure.

How Authorities Were Considered

Judgment

The Supreme Court disposed of the appeals, directing the Committee to re-evaluate the fee structure for the years 2017-18 onwards.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court relied on P.A. Inamdar & Ors. v. State of Maharashtra & Ors. [(2005) 6 SCC 537]*, T.M.A. Pai Foundation & Ors. v. State of Karnataka & Ors. [(2002) 8 SCC 481]*, Islamic Academy of Education v. State of Karnataka & Ors. [(2003) 6 SCC 697]*, and Modern Dental College & Research Centre & Ors. v. State of Madhya Pradesh & Ors. [(2016) 7 SCC 353]* to reiterate the principles governing fee fixation in private medical colleges. These cases emphasize the autonomy of private institutions while ensuring that fees are not exploitative or used for profiteering.
• The Court referred to Section 8 and Section 11 of the 2017 Act to outline the powers and functions of the Committee and the factors to be considered for fee fixation.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with ensuring a fair and transparent process for fee fixation. The court emphasized that the Committee should not act arbitrarily but must consider all relevant factors as outlined in Section 11 of the 2017 Act. The Court also stressed the importance of providing a reasonable opportunity to the managements of private self-financing colleges to present their proposals.

The Court’s reasoning was influenced by the following points:

• The need for a de novo consideration of the fee structure after the remand by the High Court.
• The importance of considering the factors mentioned in Section 11 of the 2017 Act.
• The necessity of ensuring that the fee is non-exploitative and reasonable.
• The need to provide a fair opportunity to the managements to present their proposals.

Fact:Law Ratio Table

The Supreme Court’s decision was influenced more by legal considerations (60%) than factual aspects (40%). The legal considerations primarily involved the interpretation and application of the 2017 Act and the precedents set by previous Supreme Court judgments. The factual aspects included the procedural lapses by the Committee and the need for a fair hearing to the managements.

Logical Reasoning

Key Takeaways

• The Admission and Fee Regulatory Committee must conduct a de novo review of the fee structure for MBBS courses in private self-financing medical colleges in Kerala for the years 2017-18 onwards.
• The Committee must consider all factors mentioned in Section 11 of the 2017 Act, not just audited balance sheets and provisional profit and loss accounts.
• Private medical colleges have the autonomy to propose fees, but the Committee must ensure that such fees are not exploitative or used for profiteering.
• The Committee must provide a reasonable opportunity to the managements of private self-financing colleges to present their proposals.
• The fee fixation process should be completed expeditiously to avoid further delays.

Directions

The Supreme Court directed the Committee to:

• Reconsider the proposals of the managements of private self-financing colleges for fee fixation from 2017-18 onwards.
• Take into account the factors mentioned in Section 11 of the 2017 Act and the law laid down by the Supreme Court in Modern Dental College & Research Centre (supra).
• Expeditiously reconsider the proposals and finalize the fee within a period of three months.
• Direct the managements to furnish any information required for the purpose of arriving at a decision that the fee proposed by the managements is neither excessive nor exploitative.
• Provide a reasonable opportunity to the managements of private self-financing colleges in respect of their proposals for fee fixation.

Development of Law

The ratio decidendi of the case is that the Admission and Fee Regulatory Committee must conduct a de novo review of the fee structure for MBBS courses in private self-financing medical colleges in Kerala, considering all factors mentioned in Section 11 of the 2017 Act and ensuring that the fee is neither excessive nor exploitative. The judgment clarifies that the High Court’s remand was not solely on the ground of lack of quorum and that the Committee cannot be restricted to considering only audited balance sheets and provisional profit and loss accounts.

Conclusion

The Supreme Court’s judgment in Najiya Neermunda & Anr. Etc. vs. Kunhitharuvai Memorial Charitable Trust & Ors. Etc. directs the Admission and Fee Regulatory Committee to re-evaluate the fee structure for MBBS courses in private self-financing medical colleges in Kerala from 2017-18 onwards. The Court emphasized the need for a fair and transparent process, ensuring that all relevant factors are considered and that the fees are neither excessive nor exploitative. The Committee was directed to complete this exercise within three months.